Analysis: Will Diaper Case Help Samsung in Battle With Apple?

A key battle in the smartphone patent wars may come down to underpants for toddlers. Well, at least, a case involving underpants for toddlers.

In a large-scale patent war, winning a ban on the sales of a competitor's products is one of the ways companies try to extract leverage over their adversaries.

That's exactly what Apple Inc <AAPL.O> is pursuing against Samsung Electronics Co <005930.KS> in a patent war that includes more than 20 cases in 10 countries. Apple is seeking to block the sales of Samsung's smartphones and tablets around the world, claiming they infringe Apple's patents.

Apple has scored preliminary injunctions against Samsung in Australia and Germany. Now Apple wants a ban of Samsung's products in the huge U.S. market, and that's where toddler underpants come in.

In a case decided in June, the U.S. Court of Appeals for the Federal Circuit addressed the standard needed to obtain a preliminary injunction. The case involved Kimberly-Clark Corp's <KMB.N> allegations that First Quality Baby Products had infringed its patents covering a method for manufacturing and packaging underpants for toddlers.

The court found that U.S. District Judge William Griesbach in Wisconsin abused his discretion when he granted Kimberly-Clark's request for a preliminary injunction based on the likelihood that First Quality infringed four of its patents.

To prevail in a preliminary injunction request, a party typically has to show that it will likely prove infringement and that it can withstand validity challenges by the accused infringer. In vacating the preliminary injunction, the appellate court reasoned that First Quality had "raised substantial questions of validity" with respect to three of Kimberly-Clark's patents. (The appeals court left in place the preliminary injunction for a fourth patent.)

The decision by the Federal Circuit, which often has the last word on important patent questions, could help Samsung fend off Apple's request for a preliminary injunction in the United States.

U.S. District Judge Lucy Koh did not rule on Apple's request for a preliminary injunction at a court hearing Thursday, but she said that Apple had a problem establishing the validity of its patents, according to a report by Reuters reporter Dan Levine. Under the Federal Circuit's decision in the diaper case, Apple therefore might have difficulty meeting the standard set for obtaining a preliminary injunction.

Samsung's attorney, Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan, argued that Samsung only had to show that it had raised strong enough questions about the validity of Apple's patents to beat back the injunction request.

"We think we've clearly raised substantial questions," she said.

The hearing did not go all Samsung's way. Judge Koh found that Samsung's Galaxy tablets had infringed Apple's iPad patents.

The question now may be whether those patents can withstand the Federal Circuit's preliminary injunction standard. Call it the diaper test.

Apple did not return a call seeking comment.

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(Reporting by Andrew Longstreth; Editing by Eddie Evans)